Question
Consider the mutually exclusive alternatives in the table below. Alternative Equivalent Annual Cost of Project Expected Annual Flood Damage Annual Benefits I. No flood control
Consider the mutually exclusive alternatives in the table below.
| Alternative | Equivalent Annual Cost of Project | Expected Annual Flood Damage | Annual Benefits |
| I. No flood control | 0 | $100,000 | 0 |
| II. Construct levees | $30,000 | $80,000 | $112,000 |
| III. Build small dam | $100,000 | $5,000 | $110,000 |
Which alternative should be chosen according to these criteria?
(a) Maximum benefits minus costs
(b) Largest B/C ratio
(c) Which alternative is desirable using incremental B/C ratio ?
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Handbook Of The Fundamentals Of Financial Decision Making
Authors: Leonard C MacLean, William T Ziemba
1st Edition
9814417343, 978-9814417341
